Research Of Foreign Exchange Risk Management In China Multinational Corporation

With the integrative development trend in global economy,the Foreign Direct Investment(FDI)spreads quickly over the world.Multinational Corporation(MNC)is one type of FDI,it fulfills the corporation mission of increasing the sale market share,decreasing the cost and optimizing the enterprise resources.And under the "one belt one road" strategy which released by China government,more and more Chinese corporations invest oversea to seek more developing opportunities in global market.However foreign exchange risk occurs in the oversea-investment corporation operation.Moreover,foreign exchange risk exists throughout all the investment and operation activities.The essay firstly identifies the foreign exchange risk,and then explains the foreign exchange risk which MNC’s in China encounter and risk management through analyzing the China foreign exchange rate system and the China foreign exchange derivative market.After that,it shows the effect of countermeasure for foreign exchange risk via financial statements analysis.Secondly,basing on a case analysis of risk precaution arrangement implemented in one MNC located in China,it discusses its success and failure in the risk management and lessons learnt during foreign exchange risk prevention.Finally,the essay comes up with the foreign exchange risk precautions suggestions for MNC’s,including two stages foreign exchange risk and the precautions accordingly,one is in oversea investment the precautions for financing risk and payment risk,the other is in daily operation the precautions of transaction risk,conversion risk and economic risk.The essay also indicates that it is important for MNC to strengthen the foreign exchange risk sense in increasing oversea trading,and also it is urgent for MNC to set up a foreign exchange risk management platform and employ professional financial clerk to implement the foreign exchange risk prevention arrangement.But currently in China,most companies allocate the job to accounting department staff who suffers the shortage of foreign exchange knowledge.Thus,giving the accountants more training in financial area is particularly necessary and ungently.The essay applies financial theories into financial statements analysis to detect the effect in foreign exchange risk precaution by demonstrating how a MNC implement foreign exchange risk precaution strategy to reduce the risk impact on the company’s performance,can be a valuable try to connecting the financial theories with the corporate daily operation.